The startup that wanted to dethrone Craigslist is officially shutting down

Move Loot's founders: Jenny Morrill, Bill Bobbitt, Ryan Smith, and Shruti Shah. Move Loot Move Loot, the startup that wanted to take on Craigslist with a better service for selling furniture, is shutting down effective June 29.

In an email sent to Move Loot customers, the company thanked its customers for their support in the last three years and also offered them one hour of free house-cleaning service courtesy of Handy, an on-demand cleaning startup.

The news of the shutdown comes weeks after Business Insider first reported that the startup was winding down its operations and in search of what its CEO, Bill Bobbitt, called a "symbiotic acquisition."

At the time, a source told Business Insider that the company was trying to sell its customer list. Bobbitt didn't return a request for comment on whether Handy acquired any part of the business.

The company told its customers:

"We started Move Loot three years ago to make buying, selling, and moving secondhand furniture seamless and enjoyable. At the beginning, we were just four friends with a storage unit, doing all of the pickups and deliveries ourselves and trying to solve this frustrating problem for as many people as possible. We're sorry to announce as of today the Move Loot furniture marketplace is coming to an end and we have ceased operations."

An insider tells Business Insider, though, that the writing has been on the wall for many months.

Big backers, but also big trouble

Move Loot was founded in 2013 to reinvent how people buy and sell their furniture. Instead of bad Craigslist postings that resulted in hard-to-coordinate pickups and deliveries, Move Loot's solution was to take the furniture off your hands, professionally photograph it, and deliver it once the sale was complete. Move Loot's money came from taking a cut of the profits.

The company has raised about $22 million from investors, including Google Ventures, First Round Capital, Index Ventures, Y Combinator, and Metamorphic Ventures.

But the business model had some problems.

In spring 2015, the company shifted to a "hub and spoke" distribution model, where there would be a large warehouse full of furniture in a major city and the teams would run delivery from there. It was supposed to be only a test, one former employee said.

"When we went into it, we had some estimates of costs," the person told Business Insider. "But we weren't sure how profitable it would be."

But the company was also under pressure to raise money, and it had an offer for additional funding if it hit its expansion goals by opening in New York and Los Angeles, according to this person.

By the time those markets opened, they were running at more than double the expected cost, the person said. From June on, "the costs were growing through the roof and revenues weren't keeping pace," this person said, likening it to the demise of Homejoy, another failed on-demand startup.

Move Loot's trucks are operated by the company so there's no outsourcing of logistics. Move Loot In October, Move Loot had to lay off employees, ranging from warehouse managers to marketing staff.

The mood at the all-hands meeting was tense, and employees asked management to give them the heads up if things were going badly. They were told that the cuts were the move they needed, the person said of the meeting.

"Three weeks later is when the hammer dropped on everyone else," they said.

A downward spiral

On the second round of layoffs, entire city teams lost their jobs.

Around the same time, the startup continued to position its business-model changes as a rosy picture in the press.

In November, the company broadened its marketplace so that other stores, like a local antique shop, could post their items. In March, it switched to a model where anyone could upload their own photographs to the site, and then Move Loot would take care of only the delivery part.

The change also corresponded with the company going national through a partnership with a shipping platform. Its "white-glove" service of pickup and delivery was available only in a few cities, but customers anywhere could choose to pay extra for shipping outside of those zones.

As recently as May, its founders were out talking to the press about the David versus Goliath vision they had for the startup that had promised to take out Ikea and Craigslist as the future of furniture.

Yet, that same month, the only employees left at the company were its founders and a few members of senior management. The company stopped tweeting on May 13, other than a few replies to the growing chorus of upset customers.

Customers have accused Move Loot on Twitter of taking their money and failing to deliver items. Other sellers remain frustrated that the marketplace closed with no warning, leaving them in a lurch when trying to move out. The phone number that it had given out on Twitter for customer support now has a voicemail saying that phone support is no longer available.

In its letter to customers, Move Loot now promises to complete all orders and return money to its customers. People who have sold items on the site have until July 7 to cash out any credits.

The former employee claims that the startup followed the tech mantra of move fast and break things as it tried to scale to match its ambitious vision. It would jump to step B or C before knowing if step A even worked. And in the end, the errors added up.

"At some point you realize how expensive it is if you break things every day. There has to be a little discipline," they said.